Stability, fixed expense, equity building, an excellent learning experience.... and a college education? Does it sound too good to be true? Buying a home for your college student to live in while s/he attends college is one potential investment option that could benefit everyone.
The student benefits from the stability of knowing they will not have to search out a different apartment each year before returning to college. The cost will remain stable as fixed mortgage rates lock in the monthly cost. A location close to the college reduces transportation expenses.
Where better to try this innovative strategy than with our beautiful Berkshires real estate? We have four colleges in the Berkshire, and they include:
Your college student owning a home has its benefits:
- No storing furniture over the summer break
- Security deposits will not be required each semester.
- Students can choose share the expenses of home ownership by taking in another student and splitting the monthly home costs.
- Students learn about the process of investing in real estate along with the responsibilities that go along with property ownership.
- The student can build up home equity that can be cashed out at the end of the four-year college period or held for longer-term appreciation.
- If a parent has more than one child attending college, the home can be used for as long as the family needs student housing or until the last child graduates from college.
- Depending upon the size of the home (2-3 bedrooms) the student can supplement his/her income by allowing for rental roommates
- Pets, which are not permitted in typical campus housing, can accompany your student to college and be a great comfort during lonely semesters away from home.
If you decide to have your student on the mortgage and deed you, can help the student establish credit prior to graduation? Talk to your accountant and attorney to determine which method of ownership will work best for you and your student. Some parents will choose to buy owner occupied property and others will choose to buy rental property for tax benefits. There are many ways of holding title including creating a limited liability company.
Choosing your Massachusetts condominium or a single-family home for your student requires several choices. If you choose a condominium, your student will have the advantage of no lawn care, snow shoveling or exterior maintenance. The disadvantages of a condominiums include a Homeowner's association fee that may be too high and loud stereos may bother neighbors.
A single-family residence might be easier to sell once your student has graduated. However the student will be responsible for external maintenance tasks such as mowing, watering the lawn and snow shoveling. Some neighborhoods may be less friendly to a group of students living there. This is less likely to be a problem if the home purchased is close to the college and other homes are either owned or rented by students.
Disposing of the property once your student is ready to move on can be accomplished by converting your investment to a rental property or selling the residence on the open market or even exchanging it for a piece of real estate in another location.
The potential financial and educational benefits of buying a home for your college student to live in while away at college include:
- Possible appreciation in value
- Tax benefits
- Build up of equity over the time your student attends college, which can be used to finance a home when your student moves on to his/her first job.
Talk to your accountant, your attorney and your student about this investment option and then contact Harsch Associates or a top flight Realtor ® in your market area to begin your search for that perfect home away from home for your college bound child.